The global retail industry faces an escalating crisis of overproduction, with an estimated 15–45 billion garments produced annually never finding a buyer and instead ending up in landfills. This colossal waste contributes significantly to environmental damage and costs the sector billions. Despite these alarming figures, the fashion industry is projected to increase production by 81% by 2030.
- Across the broader retail sector, overproduction leads to an average of 3.4% of inventory being wasted annually, a loss estimated at $64.5 billion. The beauty sector experiences an even higher rate of lost inventory due to overproduction, at 6.2%. In the UK, a 2022 study found that approximately £2.2 billion worth of homeware items are sent to landfill each year.
- These critical findings are detailed in the Do we really need to produce so much? report by Insider Trends x Source, which delves into the pervasive issue of overproduction within the retail industry and investigates the potential business advantages of adopting a "degrowth" strategy.
THE BUSINESS CASE FOR PRODUCING LESS: The concept of "degrowth" in retail, a planned reduction in production volumes and a push for consumers to slow consumption, is seen as a crucial step towards sustainability.
- Although 65% of fashion professionals surveyed in 2024 felt they couldn't use the term "degrowth" due to its connotations, the report argues that producing less can still be profitable by reducing waste that currently costs brands money. Billions of unsold items represent lost resources and costs, not profits.
STRATEGIES FOR WASTE REDUCTION AND SUSTAINABLE PRACTICES:
- Dropping the Micro-Trend Model: Shifting away from rapid, trend-driven production to focus on seasonless, core ranges can reduce production volume and waste0. Swedish fashion company ASKET, for instance, operates with a single, permanent collection, allowing it to avoid sales and maximise profit per garment while reducing environmental impact.
- Made to Order: Brands are increasingly returning to made-to-order models to reduce overproduction.
- Scottish womenswear brand Unfolded creates each item to order, with lead times of 3–4 weeks. This approach stemmed from founders observing the industry's reluctance to change despite data on waste.
- Kostüme, an outdoor apparel brand, uses a direct-to-consumer pre-order batch model, only producing items once a commitment to buy is made.
- Both Unfolded and Kostüme claim affordability due to reduced waste.
- Moda Operandi, a luxury retail platform, sees 20% of its business from pre-orders, which helps identify in-demand products and reduces waste.
- Customer Collaborative Design: Involving customers in the design process ensures a market for products and shifts influence from brands to consumers. Unfolded collaborates with a private group of over 8,000 women to design its collections, resulting in products with known demand and a repeat order rate twice the industry standard.
- Circular Initiatives and Services: The industry needs to maximise the value of existing items through repair, rental, resale, and redesign.
- The Ellen MacArthur Foundation (EMF) estimates circular business models could grow from 3.5% of the global fashion market in 2021 to 23% by 2030.
- Selfridges is aiming for 45% of its transactions to come from circular products and services by 2030.
- Fashion Remodel, launched by the EMF in 2024, involves major brands like Zalando and Primark in scaling circular business models.
- Ikea is committed to becoming a circular business by 2030, with 100% circular products and trials of buy-back and resell services. In 2019, IKEA reported that 47 million products were given a second life, 38 million were resold, and over 9 million were repacked.
- Brands like Zero Waste Daniel utilise industry waste and by-products as raw materials, reducing the need for new material manufacturing.
- Getting on Top of Inventory: Accurate, real-time inventory information is crucial to prevent unnecessary orders and overproduction.
- Japanese clothing brand Uniqlo provides a surprising example of growth outpacing production volume: over seven years, its business grew by 70% while production volume increased by only 20%. This is attributed to resisting constant new styles, producing timeless essentials, and using over 30 million data points annually for accurate demand forecasting. Uniqlo produces only 250 styles per season for womenswear and menswear, with half being new and half from the previous season.
- Online marketplaces like Boop offer a channel for luxury beauty and wellness brands to sell imperfect but unused products, providing an alternative to destruction.
